DY. COMMISSIONER OF INCOME TAX, RANGE-6, LUCKNOW V. VIJAY INFRASTRUCTURE PVT. LTD, LUCKNOW

ITSSA 388/LKW/2019

AI Insights

The case involves a series of appeals by the Revenue against M/s Vijay Infrastructure Ltd. concerning the credit of TDS (Tax Deducted at Source) for the assessment years 2008-09 to 2011-12. The primary contention was whether the TDS credited to the bank accounts of a joint venture, NCC-VEE, should be recognized in the hands of M/s Vijay Infrastructure Ltd., which was a partner in the joint venture. The Revenue argued that the TDS should not be credited to the assessee as the contract and the TDS were in the name of the joint venture, not the assessee directly. However, the CIT(A) allowed the TDS credit to the assessee, a decision which the Tribunal upheld, referencing various judicial precedents and the specific provisions of the Income Tax Act and Rules.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714779 (ITAT-LUCKNOW)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2009-2010
• Other Referred Cases: CIT vs. Bhooratnam & Co., Anil Ratanlal Bhora vs. ACIT, Circle-1, Nasik, CIT Vs M/s Relcom
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: SUYASH AGGARWAL
• Keywords: Question of law; TDS
• Section: 154

Judgement Text

"I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUBHASH MALGURIA, JUDICIAL MEMBER AND SHRI NIKHIL CHOUDHARY, ACCOUNTANT MEMBER I.T.(SS)A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09 to 2011-12 Dy.C.I.T., Range-6, Lucknow Vs. M/s Vijay Infrastructure Ltd., B-5/21, Vishal Khand, Gomti Nagar, Lucknow. PAN:AABCV2697Q (Appellant) (Respondent) O R D E R PER SUBHASH MALGURIA:J.M. This bunch of four appeals have been filed by the Revenue for assessment years 2008-09 to 2011-12 against the respective impugned appellate orders dated 26/01/2027, 26/01/2017, 27/01/2017 & 05/03/2019 respectively passed by learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. In all the appeals, the Revenue has raised similar grounds, except change in figures. For the ease of reference, the grounds raised by the Revenue in assessment year 2008-09 are reproduced below: Appellant by Shri Puneet Kumar, CIT (D.R.) Respondent by Shri Suyash Aggarwal, Advocate Date of hearing 17/07/2025 Date of pronouncement /07/2025 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 2 “1. That the learned CIT(A)-III, Lucknow had erred in law and facts in allowing the appeal of the assessee with regard to credit of TDS of Rs.1,40,13,241/- deducted by NHAI relating to projects undertaken through NCC-VEE JV, in light of the provisions of section 199 of the Income Tax Act, 1961 read with Rule 37BA of the Income Tax Rules ignoring the facts that the said receipts had been credited in the bank accounts of M/s NCC- VEE(JV), and the contract was also awarded to M/s NCC- VEE(JV) and not to M/s Vijay Infrastructure Limited. 2. That the Ld.CIT(A)-III, Lucknow had erred in law and facts in allowing the appeal of the assessee with regard to credit of TDS of Rs.1,40,13,241/- on the basis of Memorandum of agreement between assessee and M/s Nagarjuna Construction Company limited ignoring the facts that the memorandum of agreement was merely an understanding between the parties to apportion their share of revenue/profits and the same could not be an instrument to override the provisions of S.199 Income Tax Act and rule 37BA of Income Tax Rules. 3. That the Ld.CIT(A)-III, Lucknow had erred in law and facts in allowing the appeal of the assessee with regard to credit of TDS of Rs.1,40,13,241/- ignoring the facts that the deductee M/s NCC-VEE(JV) had not filed any declaration in favour of M/s Vijay Infrastructure Limited for credit of TDS of Rs.1,40,13,241/- as per provisions of sub rule (2) of Rule 37BA of Income Tax Rules.” 2. The grievance of the Revenue in all the appeals relates to the allowance of TDS credit by learned CIT(A) to the assessee for the assessment years under consideration. Since the facts in all the appeals are similar, we will take up appeal for assessment year 2008-09 in I.T.A. No.397/Lkw/2019 as lead case and the findings of this case shall apply mutatis mutandis to the findings of other aforesaid cases in appeal before us. The facts of the case, in brief, are that the assessee is a closely held company which was incorporated in the name of Vijai Expressway Engineers Limited, changed to Vijai Infrastructure Limited vide notification dated Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 3 31/08/2006. Again vide notification dated 31/03/2011 the name of Vijai Infrastructure Limited was changed to VIL Limited. The assessee along with M/s Nagarjun Construction Company Limited, Hyderabad formed a joint venture (JV) in the name of NCC-VEE vide agreement dated 08/12/2005 for execution of contract from National Highway Authority of India for a project situated at Lucknow-Muzaffarpur National Highway Project. The assessee filed its return of income declaring total income of Rs.9,75,16,611/-. The assessment was completed u/s 143(3)/153A of the Act on 31/03/2013 at a total income of Rs.11,06,41,930/- creating demand of Rs.5,19,14,601/-. Further, order was passed u/s 250/154/153(3)/153A of the Act on 27/11/2014 wherein the credit for TDS amounting to Rs.1,44,38,323/- was allowed. The assessee claimed further credit for TDS amounting to Rs.1,40,13,241/- deduced from the Joint Ventrue (JV) NCC-VEE, Rs.50,00,406/- deducted by PWD Azamgarh, Rs.54,88,804/- deducted by Unitech, in the application u/s 154 of the Act. The assessment was completed by the Assessing Officer vide order under section 154 of the Act on 31/03/2016, provided tax credit of Rs.1,52,29,137/- against tax credit claimed at Rs.3,32,16,032/- resulting in a short tax credit. Aggrieved with the assessment framed by the Assessing Officer, the assessee went in appeal before the learned CIT(A). Learned CIT(A), after detailed discussion, allowed the appeal of the assessee. Now the Revenue is in appeal before the Income Tax Appellate Tribunal against the TDS credit allowed by the learned CIT(A). 3. Learned CIT (D.R.), during the course of arguments before us, supported the order of the Assessing Officer. Learned CIT (D.R.) has filed written submissions which are reproduced as under: Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 4 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 5 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 6 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 7 4. Learned Counsel for the assessee, on the other hand heavily supported the order of learned CIT(A). Learned Counsel for the assessee has filed paper books and written submissions, the contents of which are reproduced below: Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 8 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 9 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 10 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 11 5. We have heard the rival parties and have gone through the material placed on record. The assessee along with Nagarjun Construction Company Limited, Hyderabad formed a Joint Venture (JV) in the name of NCC-VEE, vide agreement dated 08/12/2005 for execution of contract from National Highway Authority of India for a project situated at Lucknow- Muzaffarpur project. As per agreement, the entire project was to be executed by assessee and assessee was liable for all types of direct/indirect taxes and was also liable to make all compliances relating to project and claim benefit of TDS. Therefore, the assessee was liable to M/s N.C.C. for the performance of the projects as well as risk relating to project and in return was entitled to the project receipts. The learned CIT(A), after detailed discussion, has allowed the appeal of the assessee. The finding of learned CIT(A) is reproduced below: Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 12 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 13 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 14 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 15 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 16 Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 17 6. The Assessing Officer has not allowed the credit for the TDS deducted. The assessee claimed that the credit in the TDS should be given in the hands of the assessee as per MOU clause 11 which states that NCC hereby agrees and confirms that VEE shall only be eligible to claim benefit and also for any refund of taxes deducted at sources in respect of the payments made/to be made to Joint Venture and all other refund of taxes/statutory deductions in respect of the payments made/to be made to the joint venture and that NCC is not entitled for the same. Learned D.R. even though vehemently relied on the order of the Assessing Officer but could not convince us why the credit should not be given for the TDS in the hands of the assessee since the income is being assessed in the hands of the assessee. The joint venture has filed its return declaring nil income. Neither the TDS was claimed by the joint venture nor it was given by the Department. It is observed that in response to the return of nil income that was filed by the joint venture, Department assessed the contract receipts in Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 18 its hand, which has been successfully contested by the joint venture in appeal in the assessment year 2011-12. However, it is pertinent to note that even while assessing the contract receipts in its hands, the Department did not allow the joint venture the benefit of tax deducted at source. Thus, if we were to accept the contention of the Department that the tax credit could not be allowed to the assessee because it had been deducted in the name of joint venture, the joint venture ought to have been allowed the benefit of such tax deducted while computing its income in the relevant assessment years, but this has not been done. It is clear that if tax has been deducted then the benefit of such deduction has to be allowed to somebody. In this case the income of the contract has been accounted for in the hands of the assessee. Therefore, as per the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT vs. Bhoorathnam & Co. (supra), as the income has been offered to tax by the assessee, the assessee is entitled to claim the benefit for tax deducted at source on such income. As the ITAT, Pune ‘A’ Bench has mentioned in the order dated 19/01/2023 in the matter of Anil Ratanlal Bhora vs. ACIT, Circle-1, Nasik, the crux of section 199 read with Rule 37BA(2) is that if the income, on which tax has been deducted at source, is chargeable to tax in hands of the recipient, then credit for such tax will be allowed to such recipient and the proviso to Rule 37BA(2) is just a procedural aspect of giving effect to the mandate of section 199 for allowing credit to the other person in whose hands the income is chargeable to tax. But such procedural provision, which is directory in nature, cannot disturb the writ of a substantive provision, which is to allow the benefit of tax to the person offering the income. In fact we may observe that had the joint venture and the assessee complied with the proviso to Rule 37BA(2), then this controversy would not have arisen in the first place and then the tax would have been deducted in the name of the assessee. However, only because the joint Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 19 venture did not file the necessary statement with the deductor, one cannot use the same to deny the benefit of tax to anyone. This is not in accordance with the spirit of the Act as pointed out by Hon'ble Andhra Pradesh High Court in the case of CIT vs. Bhooratnam & Co. (supra). 6.1 On the claim of Revenue, whether the claim of TDS can be allowed or not in absence of declaration being filed by deductee in term of proviso to sub-rule (2) of Rule 37BA of the Rules, a reference may also be made to the decision of Hon'ble Delhi High Court dated 16/01/2015 in the case of CIT Vs M/s Relcom wherein the issue involved was- \"Whether in view of Section 199 of the Income Tax Act, 1961, the assessee was entitled to the TDS without offering the corresponding income i.e. total receipts of Rs.19,08,20,903/- to taxation by declaring it as total income ?\" The facts of the case were – The assessee had claimed credit of all TDS certificates, including that related to M/s REPL but the income of this certificate was not reflected in the Profit and Loss Account. The total TDS claim made by the assessee was Rs.1,20,73,097/- against a total of 19,08,20,903/- received. The assessee stated that the benefit of the TDS certificate mistakenly issued in its PAN name has not been availed by M/s REPL. The Assessing Officer (AO) rejected this claim relying on Section 199 of the Act and held that the TDS credit should be allowed to the person from whose income the deduction was made. Therefore, according to the AO, the assessee, instead of claiming the credit of the TDS which did not belong to it, should have approached the vendors for correction of their record. 6.2 After examining the issues involved, the Hon'ble Court laid down as under: Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 20 At this stage, it is also relevant to note the provisions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee. This Court relies upon the well-settled dictum that procedure is the handmaid of justice, and it cannot be used to hamper the cause of justice [Sardar Amarjit Singh Kalra v. Prarnod Gupta, (2003) 3 SCC 272]. Therefore, the revenue's contention that the assessee, instead of claiming the entire TDS amount, ought to have sought a correction of the vendor's mistake, would unnecessarily prolong the entire process of seeking refund based on TDS credit. In light of the aforesaid reasons, the question of law framed is answered against the revenue and the appeal is accordingly dismissed.” 7. Therefore, relying on the decision of Hon'ble Delhi High Court dated 16/01/2015 in the case of CIT vs. Relcom (supra), and the assessee’s own case as decided by the ITAT in I.T.A. No. 705/Lkw/2015 for assessment year 2011-12 dated 02/01/2017, we hereby uphold that the assessee having offered the income for tax, therefore, be allowed to claim the benefit of tax deducted at source u/s 199 read with section 37BA of the Act. We confirm the order of learned CIT(A) and reject the grounds taken by Revenue. 8. Since the grounds raised by Revenue in other three appeals are identical, except the amount, our findings given in foregoing part of this order, shall apply mutatis mutandis to other three appeals also. Printed from counselvise.com I.T.A. Nos.397, 388, 398 & 399/Lkw/2019 Assessment Years:2008-09, 09-10, 10-11 & 11-12 21 Accordingly, following our decision in foregoing paragraph of this order, the other three appeals are also dismissed. 9. In the Result, all the appeals are dismissed. (Order pronounced in the open court on 05/07/2025) Sd/. Sd/. (NIKHIL CHOUDHARY) (SUBHASH MALGURIA) Accountant Member Judicial Member Dated:05/07/2025 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., Lucknow Printed from counselvise.com "